Australia develops varied uses for blockchain
Australian Government keenly promotes use of blockchain in several sectors, including the public sector:
In line with the Australian Government’s support for innovations in technology, there has been sustained attention in the country on blockchain and several blockchain initiatives, including industryspecific trials in financial services, energy, agriculture and the public sector are now under way. There are several fintechs in the country, which have created use cases for blockchain, like managing supply chains, making cross-border payments, trading derivatives, managing assets and managing digital currency exchanges. Similarly, in the public sector, the Government has considered blockchain application with the Australian Taxation Office (ATO) to validate the dealer history of cars in a hackathon around Luxury Car Tax compliance. The Government’s National Disability Insurance Scheme has also experimented with blockchain and the New Payments Platform to create `smart money’ that has the capability of managing insurance payouts, budgeting and trust management.
SYSTEM FOR EXCHANGES
Likewise, the Australian Securities Exchange (ASX) has proposed a new blockchain-based system covering clearing, settlement, asset registration and other post trade services. Three of Australia’s 4 major banks have partnered with IBM and Scentre Group for a trial in managing bank guarantees for retail property leases on blockchain, reducing the issuance period for a bank guarantee from up to a month to the same day.
One of the notable initiatives recently has been the proposed replacement of the ASX’s clearing and settlement process with a blockchain-based system. The project is now in the development phase and is targeting an April 2022 go-live window. Way back in 2018, the International Bank for Reconstruction and Development had selected the Commonwealth Bank of Australia to arrange for the issue of A$110 million worth of bonds on blockchain, with each bond coined a blockchain operated new debt instrument. The bonds were governed by New South Wales law and were the first bonds to be created, allocated, transferred and managed using blockchain.
Australia has a platform that enables users to digitize interests in a new form of product that provides synthetic exposure to real world assets. Called Synthetix, it is governed by a decentralized autonomous organization and incorporates a range of smart contract functionalities to allow users to collateralize and synthesize exposure to assets in self-issued derivative like products.
NO SPECIFIC REGULATIONS
Australia does not have any specific regulations or legislation governing blockchain. The Australian Securities and Investments Commission (ASIC), Australia’s primary corporate, markets, financial services and consumer credit regulator, professes that Australian legislative obligations and regulatory requirements are technologyneutral and apply irrespective of the mode of technology that is being used to provide a regulated service. The Government as well as the regulators have been encouraging fintechs. There is also continuous discussion around the opportunities, risks and challenges that have arisen for market participants, customers and regulators. The Government has published a national blockchain roadmap that focuses on a number of policy areas such as regulation, skill building, investment, and international competitiveness and collaboration. It has also invested in supporting a range of blockchain alliance based initiatives and programs through the Australian Trade and Investment Commission.
CRYPTO AS ASSET
The current position in Australian law is that cryptocurrency is to be treated as an asset and not as fiat currency or money. Amendments to existing legislation over the last few years to accommodate increasing use of cryptocurrencies have generally been focused on transactional relationships (ie, issuing and exchanging) rather than on cryptocurrencies themselves. As a result, while cryptocurrencies themselves are not restricted under Australian law, dealings
in relation to, or ser vices involving, cryptocurrencies are likely to be captured within existing regulatory regimes.
In Australia, as much as 50% of blockchain activities are undertaken by blockchain firms and startups or larger companies with active blockchain projects or trials (among these are Australia Post, Australian Securities Exchange and Commonwealth Bank of Australia). There are also collaborative projects undertaken by Westpac and ANZ with IBM. While a majority of activities are recorded within capital cities, there are regional blockchain activities too. In Queensland, for example, several towns are now accepting cryptocurrencies as a recognized form of payment.
WORLD FIRSTS
Some of the blockchain applications in Australia are described as world firsts. For example, in bonds operations, smart programmable money, the National Blockchain System and several industryspecific trials in energy, agriculture and the public sector.
Aus t r a l i a n fintechs have also demonstrated that blockchain technology can be scalable. For example, there is SegWit, an update to the Bitcoin Core software, which has enabled increased transaction throughput by around 40%. The Australian Red Belly Blockchain can now handle 660,000 transactions per second on 300 machines, compared to 2000 transactions per second globally on the VISA network.